"This will change our lives completely." We've heard it all before, but once again tech firms and retailers say a new technology will fundamentally alter our world. The magic word is RFID, or Radio Frequency Identification. BBC News Online explains.

Oh no, not another tech revolution. What's the hype all about?

Think barcodes, and how much easier they've made our lives. For shoppers the checkout is faster, for companies it is easier to control stocks.

Now think radio barcodes, little tags that talk.

No need to pass each individual item past a laser scanner.

Instead, hundreds of tags can be read in seconds and the scanner can tell the cashier or warehouse manager not just what kind of products they are, but which individual product are in the lot.

And now take it further and think big.

RFID could allow you to identify the exact location of every single asset on your production line, your marshalling yard, in your long supply chain stretching from Beijing to Bristol.

It could alert you to "unusual" behaviour, for example stop the unauthorised car from filling up at the company petrol pump, or tell security that someone, maybe a thief, takes five packs of razor blades from the shelf - instead of the normal amount of one.

And what if a machine can be operated only by workers wearing the right kind of - tagged - safety equipment?

Great, how does it work?

RFID tags are tiny microchips - about the size of a full stop on your computer screen - that hold a unique identifier number. They are attached to a small antenna.

So-called "passive" tags are small and cheap (about 6 pence, 10 euro cents each), but only work at a range of up to five metres and require you to install an array of expensive readers (£250 - £3,000 each).

"Active" tags are larger, because they need a battery, and more expensive (about £6, 10 euro), but have a much wider range and can be read with fewer and cheaper readers.

However, the technology is developing fast and tags are getting ever smaller and cheaper.

RFID tags can be combined with sensors. A tagged crate of refrigerated goods could tell the system whether perishable goods inside got too hot.

Tagged barrels of volatile chemicals could alert managers if too many of them are stored closely together.

The applications are endless.

All this is already happening?

No, not at all.

A few companies are using RFID or similar systems to improve their logistics, but for the most part we are talking about pilot projects.

But experts predict a massive RFID roll-out from 2005 or 2006 onwards.

Initially, the technology will be used to track large or very valuable items, for example pallets or containers.

Consumer goods are unlikely to be tagged on a large scale before 2010.

So in a few years' time I will walk around with dozens of tags on me broadcasting what I bought and what I wear?

Ah yes, that's a sore point. Most retailers wince when you mention it.

In the United States privacy advocates and some politicians have already raised the issue.

Industry experts promise we won't have to worry.

RFID tags are supposed to hold nothing but a unique number. If you walk into a shop with a bag of shopping bought elsewhere, the company may know that you carry 23 tagged items, but its database won't have a match for these numbers and will ignore them.

However, it would know products that you bought in the store previously, and some retailers are now mulling whether to wipe tags at the checkout.

That, though, would also wipe out one of RFID's benefits, making it easier to return goods for exchange.

So many radio transmitters, isn't that dangerous for my health?

Not really.

The European Commission has set very low radiation levels for radio tags, much lower than those permitted in the United States.

Furthermore, the frequencies used are in the normal radio spectrum and experts
currently don't predict any particular health issues.

Do I need to get RFID in my business?

Tricky question. Even RFID fans advise caution.

Think hard which data RFID could give you and how you can use them.

Without a good business plan, the massive investment required by RFID would be pointless.

Beware the limitations of the technology and its many pitfalls. Two examples:

Radio waves don't like liquids and metal, so when Trenstar began using RFID to tag beer kegs, it had to overcome serious technical hurdles - but managed to solve the problem.

And if your big customer has asked you to use cheap short-range passive tags but your factory door is wider than 5 metres or your trucks load sideways, not through the rear, you have to think hard where and how to deploy the readers.

My small business supplies a huge retailer, and their buyer has told me to be RFID ready by July 2005. Who is going to pay?

You may have to make hard choices: Will the costs of RFID outweigh the benefits of the business relationship?

Talk to your supplier, ask for a cost-sharing agreement. Try to renegotiate the contract to allow for a sensible profit margin.

There will be a give-and-take. In return for sharing costs, you might share knowledge.

How fast are your products flying off the shelves, and when?

Such information could help you optimise your business process, and give you the edge over non-RFID competitors.